Would that it were true. Alas, no one’s taking the massive growth in national debt seriously except to offer some lip service around elections. The current fight in Congress over multiple rounds of imaginary money demonstrate that clearly enough, even at the White House.
Nonetheless, Kayleigh McEnany promised this morning that the Trump administration would take it seriously … in the next term, natch (starts at 6:20):
As America gets closer and closer to the 2020 Election, White House Press Secretary Kayleigh McEnany suggested that President Donald Trump does not view the federal debt as an issue he has to address during his first term.
During an interview with Fox News’ Sandra Smith, McEnany was asked for her response to the Congressional Budget Office’s (CBO) estimation that the federal budget is looking at a record deficit of $3 billion. [Three trillion dollars, not billion — Ed.]
“What is the president’s plan as the economy rebounds to take this on?” Smith asked. “Obviously [spending] was needed with the coronavirus pandemic — and that’s why we are looking at this right now — but something obviously has to be done about this as we slowly see the economy recover.”
“I spoke to the president about this just before before coming and joining you,” McEnany said. “He said ‘absolutely.’ The debt is a big second term priority of his. He wants to see unprecedented growth and we’ll see that on President Trump’s watch.”
Trump, like pretty much every president before him since we went off the gold standard, likes to pretend we can grow our way out of deficit spending. Remember when the tax cut in late 2017 was going to pay for itself based on sustained 4% annual GDP growth over several years? Good times, good times.
In reality, we never actually sustained 4% growth over a single year, or even in an annualized single quarter. The 2018 GDP growth rate was 3.0%, and 2.2% in 2019, well before the pandemic hit, and the best quarter since the tax cut passed in December 2017 was 2018Q1, with annualized growth at 3.8%. That was also the last quarter when the economy grew at an annualized rate of 3% or better. The next-best quarter was 2019Q1’s 2.9% annualized growth rate.
And that’s just performance against the tax cut’s arguable deficit. (Arguable, because deficits come from spending rather than collection, and tax cuts allow people to keep more of the money they earn, which is a good in itself.) The overall budget deficit in Trump’s term runs at a trillion dollars a year, roughly 5% of the economy. You’d need annualized GDP growth past 5% to account for that — and then seize every last penny of it in taxes — to grow out of the annual deficit. And even that leaves the accumulating national debt untouched.
The only serious way to deal with deficits and debt is to deal with the structural issues of federal entitlement spending — Social Security, but primarily Medicare and its unfunded liabilities. Trump has made it blindingly clear that he has no intention of pursuing entitlement reform, which means he’s not serious about either the deficit or the national debt. There is no way to cut enough from the federal budget to stop either from accumulating without rewriting the statutes that trigger the automatic spending in entitlements — and neither party has the appetite to face voters and explain that free stuff ain’t really free after all. And Trump the Populist has less appetite for that than most others in Washington.
All of this makes McEnany’s claim here all the more absurd, but at least absurd claims about deficits and debt are in season.